Correlation Between HM Inwest and Carlson Investments

Can any of the company-specific risk be diversified away by investing in both HM Inwest and Carlson Investments at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HM Inwest and Carlson Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HM Inwest SA and Carlson Investments SA, you can compare the effects of market volatilities on HM Inwest and Carlson Investments and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HM Inwest with a short position of Carlson Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of HM Inwest and Carlson Investments.

Diversification Opportunities for HM Inwest and Carlson Investments

-0.66

Correlation Coefficient

HM Inwest  Carlson Investments

Excellent diversification

The 3 months correlation between HMI and Carlson is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding HM Inwest SA and Carlson Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlson Investments and HM Inwest is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HM Inwest SA are associated (or correlated) with Carlson Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlson Investments has no effect on the direction of HM Inwest i.e., HM Inwest and Carlson Investments go up and down completely randomly.

Pair Corralation between HM Inwest and Carlson Investments

Assuming the 90 days trading horizon HM Inwest SA is expected to under-perform the Carlson Investments. But the stock apears to be less risky and, when comparing its historical volatility, HM Inwest SA is 4.82 times less risky than Carlson Investments. The stock trades about -0.27 of its potential returns per unit of risk. The Carlson Investments SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  382.00  in Carlson Investments SA on September 14, 2024 and sell it today you would earn a total of  8.00  from holding Carlson Investments SA or generate 2.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HM Inwest SA  vs.  Carlson Investments SA

HM Inwest SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest reported solid returns over the last few months and may actually be approaching a breakup point.

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with HM Inwest and Carlson Investments

The main advantage of trading using opposite HM Inwest and Carlson Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HM Inwest position performs unexpectedly, Carlson Investments can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carlson Investments will offset losses from the drop in Carlson Investments' long position.

The idea behind HM Inwest SA and Carlson Investments SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.